Glenn Simpson, the Fusion GPS founder who sponsored the unverified anti-Trump dossier, claimed in August and again Jan. 2 that the FBI has a source inside the Trump camp who lent credence to the document.

When a transcript of his secret August testimony was released on Tuesday, news headlines immediately latched onto the disclosure as a boon to a dossier whose core charges of Donald Trump-Russia collusion have been denied and not confirmed publicly.

Then suddenly, as quick as the headlines went up, some one close to Fusion was waving off reporters. Mr. Simpson had “mischaracterized” the source. It was not some one on the Trump inside, but apparently an Australian diplomat.

He was featured in a Dec. 30 New York Times story as the source who tipped off the FBI. Campaign volunteer George Papadopoulos told him over drinks that a Russian-linked professor knew of “thousands” of Hillary Clinton emails in the hands of Moscow.

How Mr. Simpson knew of the diplomat last August was unclear. He would have known of him in January when he wrote an op-ed in the New York Times in which he again told of an insider source.

“As we told the Senate Judiciary Committee in August, our sources said the dossier was taken so seriously because it corroborated reports the bureau had received from other sources, including one inside the Trump camp,” he wrote.

Moments after Sen. Dianne Feinstein, California Democrat, unilaterally released the transcript, the inside-source story spread, especially in London. The city is home base of Christopher Steele, the ex-British spy who wrote the dossier.

In his testimony, Mr. Simpson told of Mr. Steele’s meeting with FBI agents in Rome in September 2016. Mr. Steele told Mother Jones magazine he was trying to jump-start an investigation into President Trump.

Mr. Simpson testified, “Essentially what he told me was they had other intelligence about this matter from an internal Trump campaign source and that — that they — my understanding was that they believed Chris at this point — that they believed Chris’s information might be credible because they had other intelligence that indicated the same thing and one of those pieces of intelligence was a human source from inside the Trump organization.”

“It was someone like us who decided to pick up the phone and report something,” added Mr. Simpson, who said this person was not a Steele source, but an FBI one.

Hours after the transcript’s release, the corrections started.

“A source close to Fusion GPS tells me there was no walk-in source––that was a mischaracterization by Simpson of the Australian diplomat tip about Papadopoulis [sic],” tweeted NBC reporter Ken Dilanian.Whether the source the FBI supposedly told Mr. Steele about could be Mr. Papadopoulos is doubtful. He has pleaded guilty to lying to the FBI about issues surrounding his contacts with the professor. The criminal complain says the FBI did not interview him until January 2017, three months after Mr. Steele met with the agents in Rome.The story corrections correction caught the eye of Senate Judiciary Committee Chairman Charles Grassley, Iowa Republican, who on Thursday sent off a letter to Fusion attorney Joshua Levy. Mr. Grassley demanded to know why Mr. Levy did not correct the record after spending hours reviewing the transcript in October and November or contact the committee last Tuesday.” If it is true that your client’s statement to the Committee was a mischaracterization, why did you not attempt to correct your client’s statement as soon as you and/or he realized it was not accurate?” the senator wrote. Mr. Levy did not return a message seeking comment.

Mr. Simpson at first requested a private interview with committee staff instead of an opening hearing. Later, he demanded the panel release the transcript, which Mrs. Feinstein did.

The dossier was financed by the Hillary Clinton campaign and the Democratic National Committee. The money went from them to a D.C. law firm to Fusion to Mr. Steele.